(a) Any assessment attributable to a lot which remains
unpaid for a period of 30 days or longer shall constitute a lien on that lot
when a claim of lien is filed of record in the office of the clerk of superior
court of the county in which the lot is located in the manner provided in this
section. Once filed, a claim of lien secures all sums due the association
through the date filed and any sums due to the association thereafter. Unless
the declaration provides otherwise, fees, charges, late charges, and other
charges imposed pursuant to G.S. 47F-3-102, 47F-3-107, 47F-3-107.1, and 47F-3-115
are subject to the claim of lien under this section as well as any other sums
due and payable to the association under the declaration, the provisions of
this Chapter, or as the result of an arbitration, mediation, or judicial
decision.

(b) The association must make reasonable and diligent
efforts to ensure that its records contain the lot owner's current mailing
address. No fewer than 15 days prior to filing the lien, the association shall
mail a statement of the assessment amount due by first-class mail to the
physical address of the lot and the lot owner's address of record with the
association and, if different, to the address for the lot owner shown on the
county tax records for the lot. If the lot owner is a corporation or limited
liability company, the statement shall also be sent by first-class mail to the
mailing address of the registered agent for the corporation or limited
liability company. Notwithstanding anything to the contrary in this Chapter,
the association is not required to mail a statement to an address known to be a
vacant lot on which no dwelling has been constructed or to a lot for which there
is no United States postal address.

(c) A claim of lien shall set forth the name and
address of the association, the name of the record owner of the lot at the time
the claim of lien is filed, a description of the lot, and the amount of the
lien claimed. A claim of lien may also appoint a trustee to conduct a
foreclosure, as provided in subsection (f) of this section. The first page of
the claim of lien shall contain the following statement in print that is in
boldface, capital letters, and no smaller than the largest print used elsewhere
in the document:

"THIS DOCUMENT CONSTITUTES A LIEN AGAINST YOUR PROPERTY,
AND IF THE LIEN IS NOT PAID, THE HOMEOWNERS ASSOCIATION MAY PROCEED WITH
FORECLOSURE AGAINST YOUR PROPERTY IN LIKE MANNER AS A MORTGAGE UNDER NORTH
CAROLINA LAW."

The person signing the claim of lien on behalf of the
association shall attach to and file with the claim of lien a certificate of
service attesting to the attempt of service on the record owner, which service
shall be attempted in accordance with G.S. 1A-1, Rule 4(j), for service of a
copy of a summons and a complaint. If the actual service is not achieved, the
person signing the claim of lien on behalf of the association shall be deemed
to have met the requirements of this subsection if service has been attempted
pursuant to both of the following: (i) G.S. 1A-1, Rule 4(j)(1)c, d, or e and
(ii) by mailing a copy of the lien by regular, first-class mail, postage
prepaid to the physical address of the lot and the lot owner's address of record
with the association, and, if different, to the address for the lot owner shown
on the county tax records and the county real property records for the lot. In
the event that the owner of record is not a natural person, and actual service
is not achieved, the person signing the claim of lien on behalf of the
association shall be deemed to have met the requirements of this subsection if
service has been attempted once pursuant to the applicable provisions of G.S.
1A-1, Rule 4(j)(3) through G.S. 1A-1, Rule 4(j)(9). Notwithstanding anything to
the contrary in this Chapter, the association is not required to mail a claim
of lien to an address which is known to be a vacant lot on which no dwelling
has been constructed or to a lot for which there is no United States postal
address. A lien for unpaid assessments is extinguished unless proceedings to
enforce the lien are instituted within three years after the filing of the
claim of lien in the office of the clerk of superior court.

(d) A claim of lien filed under this section is prior
to all liens and encumbrances on a lot except (i) liens and encumbrances,
specifically including, but not limited to, a mortgage or deed of trust on the
lot, recorded before the filing of the claim of lien in the office of the clerk
of superior court and (ii) liens for real estate taxes and other governmental
assessments and charges against the lot. This subsection does not affect the
priority of mechanics' or materialmen's liens.

(e) The association shall be entitled to recover the
reasonable attorneys' fees and costs it incurs in connection with the
collection of any sums due. A lot owner may not be required to pay attorneys'
fees and court costs until the lot owner is notified in writing of the
association's intent to seek payment of attorneys' fees, costs, and expenses.
The notice must be sent by first-class mail to the physical address of the lot
and the lot owner's address of record with the association and, if different,
to the address for the lot owner shown on the county tax records for the lot.
The association must make reasonable and diligent efforts to ensure that its
records contain the lot owner's current mailing address. Notwithstanding
anything to the contrary in this Chapter, there shall be no requirement that
notice under this subsection be mailed to an address which is known to be a
vacant lot on which no dwelling has been constructed or a lot for which there
is no United States postal address. The notice shall set out the outstanding
balance due as of the date of the notice and state that the lot owner has 15
days from the mailing of the notice by first-class mail to pay the outstanding
balance without the attorneys' fees and court costs. If the lot owner pays the
outstanding balance within this period, then the lot owner shall have no
obligation to pay attorneys' fees, costs, or expenses. The notice shall also
inform the lot owner of the opportunity to contact a representative of the
association to discuss a payment schedule for the outstanding balance, as
provided in subsection (i) of this section, and shall provide the name and
telephone number of the representative.

(f) Except as provided in subsection (h) of this
section, the association, acting through the executive board, may foreclose a
claim of lien in like manner as a mortgage or deed of trust on real estate
under power of sale, as provided in Article 2A of Chapter 45 of the General
Statutes, if the assessment remains unpaid for 90 days or more. The association
shall not foreclose the claim of lien unless the executive board votes to
commence the proceeding against the specific lot.

The following provisions and procedures shall be applicable
to and complied with in every nonjudicial power of sale foreclosure of a claim
of lien, and these provisions and procedures shall control to the extent they
are inconsistent or in conflict with the provisions of Article 2A of Chapter 45
of the General Statutes:

(1) The association shall be deemed to have a power of
sale for purposes of enforcement of its claim of lien.

(2) The terms "mortgagee" and
"holder" as used in Article 2A of Chapter 45 of the General Statutes
shall mean the association, except as provided otherwise in this Chapter.

(3) The term "security instrument" as used in
Article 2A of Chapter 45 of the General Statutes shall mean the claim of lien.

(4) The term "trustee" as used in Article 2A
of Chapter 45 of the General Statutes shall mean the person or entity appointed
by the association under subdivision (6) of this subsection.

(5) After the association has filed a claim of lien and
prior to the commencement of a nonjudicial foreclosure, the association shall
give to the lot owner notice of the association's intention to commence a
nonjudicial foreclosure to enforce its claim of lien. The notice shall contain
the information required in G.S. 45-21.16(c)(5a).

(6) The association shall appoint a trustee to conduct
the nonjudicial foreclosure proceeding and sale. The appointment of the trustee
shall be included in the claim of lien or in a separate instrument filed with the
clerk of court in the county in which the planned community is located as an
exhibit to the notice of hearing. The association, at its option, may from time
to time remove a trustee previously appointed and appoint a successor trustee
by filing a Substitution of Trustee with the clerk of court in the foreclosure
proceeding. Counsel for the association may be appointed by the association to
serve as the trustee and may serve in that capacity as long as the lot owner
does not contest the obligation to pay or the amount of any sums due the
association, or the validity, enforcement, or foreclosure of the claim of lien,
as provided in subdivision (12) of this subsection. Any trustee appointed
pursuant to this subsection shall have the same fiduciary duties and
obligations as a trustee in the foreclosure of a deed of trust.

(7) If a valid debt, default, and notice to those
entitled to receive notice under G.S. 45-21.16(b) are found to exist, then the
clerk of court shall authorize the sale of the property described in the claim
of lien by the trustee.

(8) If, prior to the expiration of the upset bid period
provided in G.S. 45-21.27, the lot owner satisfies the debt secured by the
claim of lien and pays all expenses and costs incurred in filing and enforcing
the association assessment lien, including, but not limited to, advertising
costs, attorneys' fees, and the trustee's commission, then the trustee shall
dismiss the foreclosure action and the association shall cancel the claim of
lien of record in accordance with the provisions of G.S. 45-36.3. The lot owner
shall have all rights granted under Article 4 of Chapter 45 of the General
Statutes to ensure the association's satisfaction of the claim of lien.

(9) Any person, other than the trustee, may bid at the
foreclosure sale. Unless prohibited in the declaration or bylaws, the
association may bid on the lot at a foreclosure sale directly or through an
agent. If the association or its agent is the high bidder at the sale, the
trustee shall allow the association to pay the costs and expenses of the sale
and apply a credit against the sums due by the lot owner to the association in
lieu of paying the bid price in full.

(10) Upon the expiration of the upset bid period provided
in G.S. 45-21.27, the trustee shall have full power and authority to execute a
deed for the lot to the high bidder.

(11) The trustee shall be entitled to a commission for
services rendered which shall include fees, costs, and expenses reasonably
incurred by the trustee in connection with the foreclosure, whether or not a
sale is held. Except as provided in subdivision (12) of this subsection, the
trustee's commission shall be paid without regard to any limitations on
compensation otherwise provided by law, including, without limitation, the
provisions of G.S. 45-21.15.

(12) If the lot owner does not contest the obligation to
pay the amount of any sums due the association or the validity, enforcement, or
foreclosure of the claim of lien at any time after the expiration of the 15-day
period following notice as required in subsection (b) of this section, then
attorneys' fees and the trustee's commission collectively charged to the lot
owner shall not exceed one thousand two hundred dollars ($1,200), not including
costs or expenses incurred. The obligation to pay and the amount of any sums
due the association and the validity, enforcement, or foreclosure of the claim
of lien remain uncontested as long as the lot owner does not dispute, contest,
or raise any objection, defense, offset, or counterclaim as to the amount or
validity of any portion of the sums claimed due by the association or the
validity, enforcement, or foreclosure of the claim of lien. Any judgment,
decree, or order in any action brought under this section shall include costs
and reasonable attorneys' fees for the prevailing party.

(13) Lot owners shall be deemed to have the rights and
remedies available to mortgagors under G.S. 45-21.34.

(g) The provisions of subsection (f) of this section
do not prohibit or prevent an association from pursuing judicial foreclosure of
a claim of lien, from taking other actions to recover the sums due the
association, or from accepting a deed in lieu of foreclosure. Any judgment,
decree, or order in any judicial foreclosure or civil action relating to the collection
of assessments shall include an award of costs and reasonable attorneys' fees
for the prevailing party, which shall not be subject to the limitation provided
in subdivision (f)(12) of this section.

(h) A claim of lien securing a debt consisting solely
of fines imposed by the association, interest on unpaid fines, or attorneys'
fees incurred by the association solely associated with fines imposed by the
association may only be enforced by judicial foreclosure, as provided in
Article 29A of Chapter 1 of the General Statutes. In addition, an association
shall not levy, charge, or attempt to collect a service, collection,
consulting, or administration fee from any lot owner unless the fee is
expressly allowed in the declaration, and any claim of lien securing a debt
consisting solely of these fees may only be enforced by judicial foreclosure,
as provided in Article 29A of Chapter 1 of the General Statutes.

(i) The association, acting through its executive
board and in the board's sole discretion, may agree to allow payment of an
outstanding balance in installments. Neither the association nor the lot owner
is obligated to offer or accept any proposed installment schedule. Reasonable
administrative fees and costs for accepting and processing installments may be
added to the outstanding balance and included in an installment payment
schedule. Reasonable attorneys' fees may be added to the outstanding balance
and included in an installment schedule after the lot owner has been given
notice, as required in subsection (e) of this section. Attorneys' fees incurred
in connection with any request that the association agrees to accept payment of
all or any part of sums due in installments shall not be included or considered
in the calculation of fees chargeable under subdivision (f)(12) of this
section.

(j) Where the holder of a first mortgage or first
deed of trust of record or other purchaser of a lot obtains title to the lot as
a result of foreclosure of a first mortgage or first deed of trust, the
purchaser and its heirs, successors, and assigns shall not be liable for the
assessments against the lot which became due prior to the acquisition of title
to the lot by the purchaser. The unpaid assessments shall be deemed to be
common expenses collectible from all the lot owners, including the purchaser,
its heirs, successors, and assigns. For purposes of this subsection, the term
"acquisition of title" means and refers to the recording of a deed
conveying title or the time at which the rights of the parties are fixed following
the foreclosure of a mortgage or deed of trust, whichever occurs first. (1998-199, s. 1; 2005-422, s. 6; 2009-515, s. 1; 2011-362,
s. 1; 2013-202, s. 3.)